| Indicator | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue | ¥1444.8B | ¥1442.3B | +0.2% |
| Operating Income | ¥100.3B | ¥106.3B | -5.6% |
| Ordinary Income | ¥122.8B | ¥121.6B | +1.0% |
| Net Income | ¥99.8B | ¥69.4B | +43.7% |
| ROE | 7.8% | 5.7% | - |
The financial results for the fiscal year ended March 2026 (FY2026) were: Revenue ¥1,444.8B (¥+2.5B YoY, +0.2%), Operating Income ¥100.3B (¥-6.0B YoY, -5.6%), Ordinary Income ¥122.8B (¥+1.2B YoY, +1.0%), and Net Income attributable to owners of the parent ¥83.6B (¥+26.8B YoY, +47.2%). Revenue was broadly flat; while operating performance declined, improvements in non-operating income and a reduction in extraordinary losses drove a substantial increase in final profit. Gross margin was 26.7%, down 0.6pt year-on-year; SG&A ratio improved by 0.1pt to 19.8%; Operating margin fell 0.4pt to 6.9%. Ordinary margin improved 0.1pt to 8.5%, and net margin improved 1.9pt to 5.8%. Operating Cash Flow was ¥264.4B (¥+12.1% YoY) and Free Cash Flow was secured at ¥164.1B, enabling dividend payments and repayment of interest-bearing debt.
[Revenue] Revenue was ¥1,444.8B (+0.2% YoY), essentially flat. By segment, Electronic Materials recorded ¥262.7B (+8.0%) and was the strongest growth area; Glass was ¥596.6B (+2.0%) and remained solid; Energy Materials declined substantially to ¥120.7B (-19.5%). Life & Healthcare slightly decreased to ¥410.2B (-2.9%). In the sales mix, Glass was the largest segment at 41.3%, Life & Healthcare 28.4%, Electronic Materials 18.2%, and Energy Materials 8.4%. On a company-wide basis, a combination of volume, price and mix effects produced a slight increase, but deteriorating market conditions in Energy Materials restrained overall growth.
[Profitability] Operating Income decreased to ¥100.3B (-5.6% YoY). Cost of sales ratio worsened 0.6pt to 73.3%, lowering gross margin to 26.7%. SG&A was ¥285.5B (SG&A ratio 19.8%), down ¥1.7B YoY and improving the ratio by 0.1pt. Operating margin was 6.9%, down 0.4pt. By segment, Electronic Materials posted Operating Income of ¥39.9B (margin 15.2%, slight decline), Energy Materials recorded an operating loss of ¥32.6B (deterioration of -53.9%), Life & Healthcare generated ¥61.7B (+3.7%), and Glass earned ¥28.1B (+13.9%). The widening loss in Energy Materials heavily pressured consolidated operating profit. Non-operating income improved to ¥35.0B (prior year ¥28.8B), with foreign exchange gains of ¥6.4B (prior ¥2.1B) and dividend income received of ¥6.4B (prior ¥5.4B) contributing; non-operating expenses were ¥12.5B (prior ¥13.5B), with interest expense declining to ¥2.5B (prior ¥2.9B). Ordinary Income was ¥122.8B (+1.0%), as improvements in non-operating items offset operating decline. Extraordinary items were net -¥1.0B (prior -¥26.2B), a large improvement: gain on sale of investment securities ¥7.9B was recorded, while loss on sale of subsidiary shares ¥10.4B and impairment losses ¥1.6B were recorded. Profit before tax was ¥121.8B (prior ¥95.5B, +27.6%), income taxes were ¥28.2B (effective tax rate 23.1%), and Net Income attributable to owners of the parent was ¥83.6B (+47.2%), shifting from operating decline to a large net income increase including one-off factors.
The Electronic Materials business reported Revenue ¥262.7B (+8.0%) and Operating Income ¥39.9B (-0.3%), with a margin of 15.2%. Demand for high-purity gases for semiconductor processes remained firm, but price competition and cost increases led to a slight profit decline. Energy Materials posted Revenue ¥120.7B (-19.5%) and an operating loss of ¥32.6B (worsened from -¥21.2B), with a margin of -27.0%. Market deterioration and price declines for lithium-ion battery electrolytes pressured earnings, making this the largest negative factor for consolidated profit. Life & Healthcare delivered Revenue ¥410.2B (-2.9%) and Operating Income ¥61.7B (+3.7%), margin 15.0%, improving profitability on lower sales thanks to stable demand for pharmaceutical chemicals and fertilizers and effective cost control. The Glass business achieved Revenue ¥596.6B (+2.0%) and Operating Income ¥28.1B (+13.9%), margin 4.7%, attaining both revenue and profit growth supported by recovery in demand for architectural and automotive glass and the pass-through of price revisions. Profit margin dispersion across segments is large: Electronic Materials and Life & Healthcare maintain high 15%-level margins, while the Energy Materials loss drags down consolidated margins.
[Profitability] Operating margin was 6.9% (down 0.4pt from 7.4% prior), Ordinary margin was 8.5% (up 0.1pt from 8.4%), and Net margin was 5.8% (up 1.9pt from 3.9%). ROE was 7.8% (improved 2.9pt from 4.9%), ROA was 6.1% (improved 0.3pt from 5.8%), indicating improved capital efficiency though still room for improvement versus industry averages. Gross margin was 26.7%, down 0.6pt, reflecting lingering effects of raw material and energy costs. [Cash Quality] Operating Cash Flow was ¥264.4B, 3.2x Net Income, and Operating CF/EBITDA was 1.47x—both high levels, indicating very strong cash generation. Working capital improvements were supported by collection of trade receivables (¥32.6B) and reduction of inventories (¥28.8B), though accounts payable decreased by ¥6.6B. Days Sales Outstanding (DSO) improved to 89 days (from 99), Days Inventory Outstanding (DIO) improved to 148 days (from 159), and Cash Conversion Cycle (CCC) improved to 189 days (from 217). [Investment Efficiency] Capital expenditures were ¥93.8B, 1.17x depreciation ¥79.9B, balancing maintenance and growth investment. Tangible fixed assets / total assets ratio was 30.9%, and work-in-progress ratio was 4.6%, indicating an appropriate investment pipeline. [Financial Soundness] Equity Ratio was 64.8% (improved 7.8pt from 57.0%), indicating a very solid financial base. Current ratio was 254.5% and quick ratio 192.6%, showing no short-term liquidity concerns. Interest-bearing debt was ¥238.4B (down 44.2% from ¥427.2B), Debt/EBITDA was 0.82x, and interest coverage was 40.1x, reflecting very low financial leverage and steady deleveraging.
Operating Cash Flow was ¥264.4B (prior ¥235.9B, +12.1%). Within the operating CF subtotal of ¥266.6B, inventory decrease ¥28.8B and trade receivables collection ¥32.6B contributed positively, while decrease in trade payables ¥6.6B was a negative contributor. Corporate tax payments were ¥16.5B; interest and dividends received totaled ¥8.9B; interest paid was ¥2.4B, with working capital efficiency supporting operating cash flow. Investing CF was -¥100.3B, primarily due to capital expenditures of ¥93.8B, partially offset by proceeds from sale of subsidiary shares ¥5.0B and proceeds from sale of securities ¥8.6B. Free Cash Flow was ¥164.1B (prior ¥193.4B, -15.1%), enabling dividend payments of ¥42.9B, long-term borrowings repayment ¥71.1B, and bond redemptions ¥80.0B. Financing CF was -¥176.7B (prior -¥175.7B), mainly consisting of dividends ¥42.9B, dividends to non-controlling interests ¥8.1B, and net repayment of interest-bearing debt. Cash and cash equivalents at period-end were ¥220.8B (prior ¥220.4B, +0.2%), essentially flat. Operating CF / Net Income multiple was 3.2x and FCF / Net Income multiple was 2.0x, indicating very high cash generation relative to profit and room to balance dividends and financial improvement.
Of Ordinary Income ¥122.8B, ¥100.3B was earnings from core operations and non-operating income ¥35.0B (2.4% of Revenue) provided supplementary support. Major components of non-operating income were dividend income received ¥6.4B and foreign exchange gains ¥6.4B; foreign exchange gains increased from ¥2.1B prior, reflecting a temporary impact from yen depreciation. Extraordinary items were net -¥1.0B, having minor impact on Net Income; recorded items included gain on sale of investment securities ¥7.9B (one-off), loss on sale of subsidiary shares ¥10.4B (one-off), and impairment losses ¥1.6B (substantially improved from prior ¥20.7B). Subsidy income ¥7.8B (prior ¥4.1B) is also included in non-operating income, indicating policy support contribution. The accrual ratio is -9.1% ((Operating CF ¥264.4B - Net Income ¥99.8B) / Total Assets ¥1,978B), which is favorable; Operating CF / Net Income multiple of 3.2x indicates high cash realization quality. The divergence between Ordinary Income and Net Income is within the impact of tax expense ¥28.2B (effective tax rate 23.1%) and non-controlling interests ¥10.0B, suggesting limited structural distortion. One-off factors' contribution to Net Income is estimated within approximately 10%, and the majority of earnings derive from recurring business activities.
The FY2027 (year ending March 2027) full-year forecast is: Revenue ¥1,640.0B (+13.5% YoY), Operating Income ¥100.0B (-0.3%), Ordinary Income ¥103.0B (-16.1%), Net Income attributable to owners of the parent ¥72.0B (-13.9%), EPS ¥290.45, and Dividend ¥85 (annual). The plan targets revenue growth but flat Operating Income and declines in Ordinary and Net Income, reflecting conservative guidance. Revenue progress rate is 44.1% (half-year results / full-year forecast) and Operating Income progress rate is 50.1%, slightly ahead of plan, while Ordinary Income progress rate is 59.6%, elevated due to upside in non-operating income. The company likely assumes reversal of non-operating income and normalization of extraordinary items in the second half. The dividend forecast of ¥85 is halved from the prior year’s ¥170, reflecting a conservative profit outlook. Reduction of the Energy Materials loss, progress on price revisions, and working capital efficiency are key to achieving the plan.
Annual dividend was ¥170 (interim ¥85, year-end ¥85), with a payout ratio of 74.2%. The prior year also maintained a dividend of ¥170 (payout ratio 74.2%). Dividend stability is high: Free Cash Flow ¥164.1B versus total dividends ¥42.9B gives an FCF coverage of 3.8x, indicating ample capacity. No share buybacks were conducted (treasury stock purchases in Financing CF ¥-0.0B), so shareholder returns are concentrated on dividends. The payout ratio of 74.2% is high relative to the industry average, but considering Free Cash Flow and cash balances of ¥257.0B, it is within a sustainable range. The FY2027 dividend forecast is ¥85 (50% cut), aligned with conservative profit assumptions, but upward revision at year-end remains possible depending on performance. Total return ratio is 74.2%, comprised solely of dividends.
Continued loss risk in the Energy Materials business: Energy Materials recorded an operating loss of ¥32.6B (margin -27.0%), with the loss widening from -¥21.2B prior. Continued market deterioration and price competition for lithium-ion battery electrolytes increase the risk of additional impairment losses or the need for business restructuring. Against consolidated Operating Income of ¥100.3B, the ¥-32.6B loss represents a 32.5% drag; delayed profit recovery in this business would make achieving consolidated profit targets difficult.
Worsening working capital efficiency risk: Although DSO 89 days, DIO 148 days, and CCC 189 days are improved year-on-year, inventory of ¥261.2B (18.1% of Revenue) remains high. Prolonged inventory stagnation raises the risk of obsolescence and valuation losses, pressuring liquidity and margins.
Volatility in non-operating income risk: Foreign exchange gains ¥6.4B (prior ¥2.1B) and dividend income received ¥6.4B (prior ¥5.4B) contributed to Ordinary Income improvement, but these items depend on exchange rates and investee dividend policies. A yen appreciation could result in foreign exchange losses, and dividend cuts by held equities would reduce non-operating income, making it difficult to achieve Ordinary Income targets. The FY2027 Ordinary Income forecast of ¥103.0B (-16.1% YoY) likely incorporates normalization of non-operating income.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 6.9% | 7.8% (4.6%–12.3%) | -0.8pt |
| Net Margin | 6.9% | 5.2% (2.3%–8.2%) | +1.7pt |
Operating margin is 0.8pt below the industry median, while Net margin is 1.7pt above, indicating final profit efficiency exceeds industry average due to non-operating income contribution.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | 0.2% | 3.7% (-0.4%–9.3%) | -3.5pt |
Revenue growth rate is 3.5pt below the industry median, placing the company in the lower ranks for growth.
※ Source: Company compilation
The widening loss in the Energy Materials business is the largest earnings bottleneck; progress in improving this business’s profitability is key to restoring consolidated margins. Monitoring quarterly profit trends is important given potential impairment risks and business restructuring.
With Operating CF ¥264.4B and Free CF ¥164.1B, the company generates ample cash to support dividends and repay interest-bearing debt, resulting in an extremely healthy financial position. Equity Ratio 64.8%, Debt/EBITDA 0.82x, and interest coverage 40.1x indicate very low financial risk.
Working capital efficiency is improving (CCC 189 days), but DIO 148 days remains long; inventory reduction progress will be the primary lever for next-period cash flow and margin improvement. Further reductions in DSO 89 days are possible, and enhancing receivables and inventory management accuracy is key to capital efficiency.
This report is an automated earnings analysis document generated by AI from XBRL financial statement data. It does not constitute a recommendation to invest in any specific securities. Industry benchmarks are reference information compiled by the company based on public financial disclosure data. Investment decisions are your responsibility; please consult professionals as necessary.